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Snap Shares Drop the First Time after Its Popular Offering in This Month

e-Marketer, which is a researching firm, has predicted that Snap will be creating lesser revenue from its primary source in the year 2017.

On Tuesday, the prices of the shares of Snap went down by the rate of 2.8 percent to a value of 20.51 dollars. This is the first time that Snap’s shares went down since its parent company introduced the offering in the beginning of this month that became a huge hit.

The shares are still higher than their initial value, which was 17 dollars.

Many analysts have been concerned about how the user growth of Snap has been declining slowly and the reliance of Snap on the advertising revenue is giving more fumes to these concerns.

According to the report prepared by e-Marketer, the advertising revenue of Snap for the year 2017 could be reduced by about 30 million from the price that had been predicted earlier. Advertising is a significant part of the revenues that are generated by Snap and for the year 2016, 96 percent of the entire revenue of Snap has come only from advertising. The firm e-Marketer expects Snap to generate a sum of 770 million dollars in terms of the revenue by advertising in the year 2017, which is lower than their prior expectation that was 800 million dollars.

An analyst from e-Marketer, Cathy Boyle said that this advertising revenue does not affect the material business that Snap holds, but displays the sharing of revenues and capitals between Snap and its publishers.

e-Marketer however concluded that the sharing of revenues with the advertising partners, which comprises of the companies that take out ads of vertical videos have seen a rise. These companies have spots in the Discover Section of Snapchat. Some of the publishers with whom Snap shares a partnership are The Washington, Vice, CNN, and Buzzfeed. Vice has announced on Tuesday that it will be signing an agreement with Snapchat to produce a video, which has exclusive content.

An analyst from FBN Securities, Shebly Seyrafi said that if Snapchat started to adopt methodologies that will reduce the sharing of revenues with the publishers and starting generating revenues only with their contents, then in that case the revenue of the Snap is likely to rise by a rate of 158 percent from its value 404 million dollars that was observed in the year 2016.

On the other hand, the rival of Snap that is Twitter will be seeing a decline of 4.7 percent in this year as it is facing a drop in its user growth after every year and is also facing a number of other challenges. The firm stated that by the year 2019, Snap is going to surpass the share of the mobile ad market of Twitter.

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